Providence predicts Irish oil boom as field reserves upgraded

Boss of Irish explorer says that 280m barrels of recoverable oil off the Cork coast marks a 'big moment' for the economy

Rig which was used in oil drilling at Barryroe, Ireland, as Providence Resources said that the amount of oil expected from the site was higher than expected. Photograph: Finbarr O'Rourke/Providence Reso/PA

Ireland's first offshore oilfield is a "big moment" for the Irish economy and will bring jobs as well as security of supply, the boss of Irish oil explorer Providence Resources has said.

The company, which is drilling in every major basin off Ireland, said its Barryroe field off the Cork coast will yield more oil than expected, which could trigger an oil rush off the Republic's coastline.

"It's very good news for Providence shareholders and the Irish economy," O'Reilly told Radio 4. "We hope this will not be a single project. From an Irish perspective, here we have no oil industry. This really heralds the beginning of that industry." He expects UK companies to turn their attention to the Irish Sea.

There are several offshore gas fields, including Corrib off the west coast of Ireland which was discovered in 1996 but has been dogged by planning delays and protests. The country has no oil industry – apart from a refinery near Cork that Providence wants to use.

Providence now estimates that 280m barrels of oil can be drilled at Barryroe. O'Reilly said the average recovery rate of 27% exceeded earlier expectations, which put the amount of oil that can be delivered from the site at 16%. This compares with an average of 38% in the North Sea.

The company is in discussions with potential partners. It is seeking a €1bn (£803m) tie-up with a major oil company to deliver the oil first discovered at the site in July. The field, which is 100m deep in the water and located 50km off the south coast of Ireland, is estimated to have 1-1.6bn barrels of oil but not all of it can be drilled.

The shares climbed 3.6%, or 25p, to 725p on the news.

While Providence thinks it can deliver between 17% and 43% of the oil at the Barryroe site, the recovery rate for the main reservoir, Basal Wealden, is estimated at 31%. The explorer plans to drill 41 production and 22 water-injection wells which will be 600m long.

Northland analyst Andrew McGeary said: "This announcement does not disappoint but the fairly wide range indicated suggests this is a fairly early prognosis open to further refining. However, if the 31% incorporated into the initial development scenario proves accurate this would be very good news."

The company has kicked off an engineering study. John O'Sullivan, technical director of Providence, said: "These reservoir and dynamic modelling studies have identified significant productive potential in the Basal Wealden reservoir, which is consistent with the test and other data that we have previously announced."